Liberal Sav. & Loan Co. v. Frankel Realty Co.
| Decision Date | 31 December 1940 |
| Docket Number | 28169. |
| Citation | 30 N.E.2d 1012,137 Ohio St. 489 |
| Parties | LIBERAL SAVINGS & LOAN CO. v. FRANKEL REALTY CO. et al. |
| Court | Ohio Supreme Court |
Syllabus by the Court.
1. An aggrieved party in a chancery suit may within twenty days after final judgment waive a pending motion for a new trial and perfect an appeal to the Court of Appeals on questions of law and fact.
2. F, a corporation, held certain premises under a head lease expiring September 10, 1938, and containing a clause which gave the lessee the right to purchase the premises on or before that date. On January 8, 1929, the head lease then being in force, F sublet a portion of the premises to L, a corporation, for a period of twenty years. In this sublease were a covenant for quiet enjoyment and a provision that F would exercise the privilege of purchase within the time stipulated or on F's failure to do so, L could exercise it. F having failed to perform its agreement to exercise the privilege and L not having done so, the head lease was extended on September 7, 1938, for a period of three years at a reduced rental with like privilege of purchase to F, the lessee therein. On October 5, 1938, such extension was supplemented by another writing by the terms of which L, as F's sublessee, was assured possession and quiet enjoyment of premises demised to it by the sublease and, in case F should transfer its extended head lease to a nominee, such nominee should be caused to carry out all obligations to such sublessee under its sublease. During the three-year period created by the extension and supplemental extension of the head lease R was named as nominee and the interests of the lessee under the head lease were conveyed by F to R by warranty deed which contained a covenant that R by accepting the deed was bound to carry out the provisions of the sublease to L and to grant L, as sublessee, quiet and peaceable possession. L did not pay the monthly installment of rental due September 1, 1938, or any installment thereafter accruing but continued in possession of the premises. L, during the extended term of three years brought an action to avoid the sublease, enjoin F from collecting further rental thereunder and obtain a declaration of rights in such premises. F crosspetitioned against L for accrued rental. Held:
(a) The sublessor's covenant to purchase before the expiration of the time specified was an independent covenant and its breach did not release the sublessee from the performance of its covenants.
(b) By the terms of the extension and supplemental extension of the head lease and the covenants of the nominee, to whom the head lease was transferred, the rights of the sublessee were fully protected, and the contract of sublease made valid.
(c) There was no eviction of the sublessee actual or constructive and consequently no breach of sublessor's covenant for quiet enjoyment.
(d) The sublessee is not entitled to a cancellation of the sublease on the ground the covenant to purchase has been broken.
(e) The transfer of the interest, which the sublessor held by reason of the extension of the head lease, terminated the right of the sublessor to installments of rent accruing after the transfer; thereafter right to accrued rents was in the nominee to whom the interest of the sublessor was transferred.
On September 15, 1938, the Liberal Savings & Loan Company hereinafter called Liberal, began an action in the Court of Common Pleas of Hamilton County, Ohio, against the Frankel Realty Company, hereinafter called Frankel, the heirs of Christian Boss, hereinafter called the Boss heirs, who owned the fee and the Fifth-Third Union Trust Company, surviving trustee under the will of Christian Boss, deceased, defendants, seeking a declaration of its rights under a sublease executed by Frankel to Liberal, a cancellation of the sublease and an injunction restraining Frankel from collecting further rents.
Frankel filed an amended answer and cross-petition praying for a judgment against Liberal for past due installments of rent and interest. On April 11, 1940, August A. Rendigs, Jr., nominee of the Boss heirs, filed an answer and crosspetition in the Court of Appeals praying for judgment against Liberal for rents accruing on and after October 1, 1939.
The controlling facts which are undisputed are as follows:
Christian Boss died testate on September 19, 1908, devising certain of his property in trust for a period of twenty years. On September 3, 1927, the Fifth-Third Union Trust Company (one of the defendants herein), as the surviving trustee under decedent's will, entered into a written contract of lease demising to Frankel a portion of the devised premises known as 24-26 East Sixth street, Cincinnati, Ohio.
The term of this lease was for eleven years and one month with the privilege of purchasing the demised premises for $600,000 of which amount Frankel paid on the purchase price at the time the lease was entered into the sum of $75,000 and paid a like amount on September 9, 1928, leaving a balance of $450,000. This lease is called the head lease.
Thereafter Frankel changed the building from a warehouse to an office building and expended approximately $190,000 on improvements.
On January 8, 1929, Frankel sublet the first floor and basement to Liberal for a period of twenty years, beginning January 1, 1929, at a rental of $1,750 for the first ten years and $2,000 for the remainder of the term payable in advance on the first day of each month. This sublease contained the following provision: 'Lessor covenants that it will exercise its privilege of purchasing the fee of the property hereby leased on or before September 10, 1938, and that if lessor fails to exercise said privilege, lessee may exercise the same which right is hereby granted, in the event of such failure.' The sublease also contained a covenant for quiet enjoyment.
On January 11, 1929, the testamentary trust created by Christian Boss having expired under the terms of the last will and testament, the Fifth-Third Union Trust Company conveyed the property to the Boss heirs, subject to the head lease to Frankel.
Frankel did not exercise its right to purchase the property on or before the stipulated date (September 10, 1938), and neither did Liberal do so although it had knowledge that Frankel did not choose or intend to exercise its privilege.
On September 7, 1938 (three days before the expiration of the head lease), Frankel entered into a written agreement with the Boss heirs by the terms of which the head lease from the Fifth-Third Union Trust Company, as trustee, was extended for a period of three years. This extension agreement provided for a reduced rental of $1,500 per month for the extended term and included the privilege of purchase for $450,000.
On October 5, 1938, a supplemental extension of lease was entered into by which the extended term of three years, the rental and privilege of purchase were not affected. It contains the following provisions:
notice of its option to exercise such right is given in writing to the lessors, on the 10th day of September, 1939, or on the 10th day of September, 1940, to execute and deliver to a nominee of the lessors, a conveyance or assignment of all of its right, title and interest under said head lease as herein extended and shall thereafter be relieved from all personal liability for the payment of the rental reserved herein; provided all obligations for the payment of taxes, assessments, maintenance, insurance, repairs and all other obligations of said lease have been fully complied with. Lessors agree to name such nominee promptly on demand of lessee.
'3. Lessee agrees that during the term of this extension, it will not enter into any modification, change or alteration of any subleases covering any portion of said premises so as to in any way modify, change or alter the obligations under any such sublease beyond the term for which lessee is bound under the terms of this extension. Further, that said lessee will not enter into any sublease for any portion of the premises covered by the head lease for any term extending beyond September 10, 1943, nor at a rental less than the fair current value of equivalent space.
'4. Lessee agrees that should the head lease as herein extended not be assigned to a nominee of lessors prior to such date, and no further extension has been agreed upon between lessors and lessee, and the privilege of purchase contained in said head lease as extended has not been exercised, it will on September 8, 1941, assign, transfer and convey on demand of the lessors, its right, title and interest under said head lease as herein extended to the nominee of lessors.
The Boss heirs made Rendigs their nominee and Frankel, on September 9, 1939, executed and delivered to Rendigs as such nominee a warranty deed conveying its interest in the...
To continue reading
Request your trial